Why are the French building $50B submarines in Adelaide?

August 17, 2016

Australia’s perceived vulnerability of being a Western state deeply rooted in the Asia Pacific region could not be more clear following the Coalition’s recent decision to invest in the building of new submarines.

Official justifications

Toward the end of April 2016, the Australian government finalised a A$50 billion deal with France to build 12 Shortfin Barracuda Block 1A model submarines. These submarines would serve as a replacement for the Collins class submarines in use by the Royal Australian Navy.

The current Collins class submarines require a crew of 58 people per boat in order to operate, a fielding requirement that the Navy has struggled to maintain. While the government has remained mum about the details, there have been suggestions that the French subs would be able to fulfill the Navy’s operational requirements without placing a strain on its staffing. Yet this seems unlikely, given that the French subs will be up to 1.5 times larger than the current Collins class subs.

Strategically, the Shortfin Barracudas were selected for their range and endurance, the ability for the subs to operate for long stretches of time without needing to return to base. This is obvious when you consider Australia’s geological position. Secluded to a continent by itself removed from the rest of the world, Australia needs to be able to defend its waters, especially its trade lanes.

Potential of obsolescence

The timeline here is important: the first of the fully constructed subs will not be operational until 2030, and the final sub is expected to roll out in approximately 2060, a full 44 years away from present time. This timescale is significant, and has prompted warnings by the recently retired US Navy Chief Admiral Jonathan Greenert that advances in technology may make it easier to destroy large submarines, similar to the ones designed by the French. This prompts the question: Why is Australia spending A$50 billion (Australia’s largest defence contract to date) to build subs that may face obsolescence before completion?

Criticisms

The decision to expand the navy’s arsenal has not been universally well received; in fact, some would argue that in light of this controversial decision, support for the government has been – colloquially put – ‘sinking’. Amongst other things, criticism has been directed towards the practicality and the political and economic consequences of the civil defence project, which has been dubbed as the “contract of the century” by the French media.

In terms of practicality, critics have questioned whether the submarines – especially ones that cost A$50 billion – are actually a necessity for Australia. Despite the need to continually update a state’s protection mechanisms, the government’s decision to significantly increase military spending appears odd, even more so with the current budgetary issues that Australia is facing.

In the economic and political stratosphere, the government’s decision has also been met with scepticism, both internationally and domestically.

Australia snubs Japan

On an international scale, Australia has been criticised for alienating what is arguably its closest ally in Asia – the Japanese – by contracting France to carry out the development of these submarines instead of Japan. The decision to proceed with France above other competitors for the contract such as Germany and Japan came as a shock to most. The blow was especially deep for the Japanese, as they were slated to be the recipients of the submarine contract due to the strong relationship between Japanese PM Shinzo Abe and former Australian PM Tony Abbott, who was replaced by Malcolm Turnbull in 2015. To add insult to injury, Mr. Abe was relying on the submarine deal as a crucial element in revitalising Japan’s arms-exports industry after the ban on weapon exports was lifted in 2014. Thus, Australia has possibly taken a diplomatic step backwards from the relationship that it has been nurturing with Japan in the past few years.

Japan’s wounds are unlikely to heal anytime soon, but there were indeed several deciding factors (prima facie) that ultimately led the Australian government to side with France. Firstly, the Japanese were attempting to re-enter the arms export industry after decades of pacifism, a period in which the development of arms were banned by the Japanese government. In comparison, the French have had a greater degree of ongoing experience with designing and building weapons in recent years. Secondly, the French had a more flexible design in mind for the submarines, with the ability to switch to nuclear power should the Australian government ever decide to do so. Although opposition to nuclear power is still strong in Australia, commentators have speculated that the government is contemplating nuclear armament as an option in expanding their military arsenal. The Japanese design of the submarines was also believed to be unsuitable to Australia’s sea terrain in comparison with the French design.

Search for election support

Domestically, speculation regarding the ulterior political motives of the government’s submarine project has arisen. Following the announcement of the project, the government has assured Australian citizens that the submarines will be built in Australia and specifically, in South Australia, creating thousands of jobs in the region. As shown below, the South Australian unemployment rate has escalated into a serious issue, mainly due to the deteriorating manufacturing industry. This issue will be further exacerbated by the closure of the automotive industry, which is expected to occur in the following year.

Unemployment Rates by State and Territory, March 2016 (%)

(Retrieved from www.lmip.gov.au)

As shown above, unemployment is significantly greater in South Australia compared to other regions within the country. Although the government has attempted to use this reason to justify the submarine deal, some still remain unconvinced. Recently, support for the current Coalition government in South Australia has been waning, prompting critics to label the submarine project as a bid by the Turnbull government to win votes in the upcoming election. Economically speaking, commentators also believe that the overall cost of the project outweighs the benefits it will provide to the South Australian labourers and will only act as a drain on the taxpayer’s dime.

Adversarial stance in Asia?

With the Turnbull government releasing its Military White Paper earlier this year, the new French submarine contract has brought about even more criticism for the government in regards to its new defence budget and economic priorities in general.

Pledging to increase military spending by $30 billion over the next decade, the government has reaffirmed its commitment to bring up the defence budget to around 2% of national GDP. Not only will the government be committing to constructing these submarines, but it will also be procuring 72 F-35A Joint Strike Fighters, 14 P-8A Poseidon surveillance aircraft, 2 Boeing C-17A Globemaster III aircrafts, as well as increasing operations expenditure by $752.7 million.

With the majority of the defence budget being invested in the Navy, in its White Paper, the government has justified its spending by highlighting the importance of maritime security in the coming decade to guard against threats from Asia. The increase in wealth in the South-East Asia region has resulted in many Asian countries, such as China and Indonesia, modernising their defence forces, which places pressure on Australia to keep pace, with the increasing of the defence budget to 2% of GDP puts Australia on par with the military spending of China, which is at 1.9% of GDP.

While national security is an important aspect of any country’s agenda, in a time of tight budget constraints, the increase in Australian military spending has been met with strong criticism, primarily concerning the opportunity cost of it all. With the budget already in deficit, many have wondered how the extra funds will be raised. In Scott Morrison’s 2016 Budget released earlier this week, the extra funds for military will be expected to come at the expense of university students and working parents. Higher Education Reforms are expected to raise $2 billion in revenue, and delays in child care subsidies are expected to raise $1.1 billion in revenue in the coming year. The public sector will also take a hit with cuts to funding for government agencies expected to raise $1.4 billion in the next three years. The spending figures have made many question the economic priorities of the Turnbull government, particularly why so much money is being invested in military operations and hardware.
Indeed, opponents of the spending hike have argued that the government has taken an overly adversarial position against Asia. The new government’s stance on national security, which focuses on strengthening Australia’s own defensive capabilities, heavily contrasts the stance taken by previous governments, particularly Kevin Rudd’s. Rather, Rudd concentrated more on improving relations with Asia through trade agreements and economic policies. The alienation of Japan in the recent French submarine contract merely reaffirms the frigid message towards Asia that the Turnbull is broadcasting to the rest of the world.

With Australia occupying an incredibly unique position in the global community, as a Western nation so intimately connected, not only geographically, but also politically, with Asia, is it in Australia’s best interests to adopt a harder stance against Asia? Is the threat from Asia great enough to warrant the increase in military spending or should Australia focus more on boosting cooperation and multinational rapport? As the world moves into the Asian century, these are just some of the questions that need to be addressed as Australia continues to reconcile its identity as a Western-Asian nation.

References:

Australian Department of Defence,. (2016). 2016 Defence White Paper. Canberra: Commonwealth of Australia. Accessed on 2 May 2016

Grace, L. (2016). Japan asks for explanation on ‘deeply regrettable’ decision to give submarine contract to France’s DCNS. Herald Sun. Retrieved from http://www.heraldsun.com.au/news/national/japan-asks-for-explanation-on-deeply-regrettable-decision-to-give-submarine-contract-to-frances-dcns/news-story/52b904b22cae3dffc71eeb5a90a8c0a6. Accessed on 2 May 2016

Mitchell, A. (2016). Malcolm Turnbull’s submarines: buying the South Australian vote. Australian Financial Review. Retrieved from http://www.afr.com/opinion/columnists/alan-mitchell/turnbulls-submarines-buying-the-south-australian-vote-20160428-gohksu. Accessed on 2 May 2016

Murphy, J. (2016). Sub standard: why the $2,000 we are each spending on submarines will probably be a terrible waste. News. Retrieved from http://www.news.com.au/technology/innovation/design/sub-standard-why-the-2000-we-are-each-spending-on-submarines-will-probably-be-a-terrible-waste/news-story/6922de6f6a72657c669fdc1a1248916f. Accessed on 29 April 2016

Sydney Morning Herald,. (2016). Submarine deal: Australia must act to mend ties with Japan, defence experts say. Retrieved from http://www.smh.com.au/federal-politics/political-news/submarine-deal-australia-must-act-to-mend-ties-with-japan-defence-experts-say-20160426-gofkeq.html. Accessed on 1 May 2016

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ, its Partners and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.